Missed Out on the Bull Market Recovery? 10 ETFs to Help You Build Wealth for Decades. | The Motley Fool (2024)

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The stock market, as measured by of 500 of America's biggest companies, has been surging recently. At one point in October 2022, the index sat at 3,583. By July 2024, last month, it was up a whopping 57% to 5,615. That's enough to discourage many investors, who may be thinking that it's too late to invest in stocks now.

That's wrong-headed thinking, though -- because you never know what the stock market will do from day to day or year to year. Consider, for example, that after posting gains in eight consecutive years, from 2009 to 2016 (with six of the eight being double-digit gains), when you'd think it was due to drop, the S&P 500 went on to gain nearly 22% in 2017. Trying to time the market is a waste of time.

If you're many years, if not decades, from retiring, you should be looking for great investments you can buy and hold on to for the long term. Exchange-traded funds (ETFs) are worth thinking about for this. (An ETF is a mutual fund-like security that trades like a stock.)

10 ETFs to help you build wealth for decades

Here is a list of ETFs you might consider to help you build wealth over time. Each is on the list because it has a solid (or amazing) track record and/or solid growth potential -- plus a reasonable or low expense ratio (annual fee). For context, know that if you invest $10,000 in an ETF with an expense ratio of 0.35%, you'll be paying about $35 in fees for the year.

I've ranked them by their five-year average annual returns -- but remember that past results won't necessarily reflect future results. Much depends on how the underlying stocks perform.

Source: Morningstar.com, as of Aug. 2, 2024.

Why these ETFs?

Here's why I included these 10 ETFs:

• The SPDR S&P 500 ETF is in the mix because it's a simple S&P 500 index fund, and such a fund alone can be all you need if you want to be invested in stocks. Together, its holdings represent around 80% of the entire U.S. stock market's value. Investing in an S&P 500 index fund is like betting on the future of the American economy.
• The SPDR Portfolio S&P 500 Growth ETF is invested in the roughly 230 stocks in the S&P 500 that can be considered growth stocks.
• The VanEck Semiconductor ETF and the iShares Semiconductor ETF have posted the most amazing returns in this group because semiconductor stocks -- such as Broadcom, Advanced Micro Devices, and Nvidia -- have been terrific performers in recent years. If you're bullish on their future, such ETFs will let you invest in two to three dozen of them in one fell swoop.
• A bunch of other ETFs in the list are very focused on technology stocks, in one way or another. The Technology Select Sector SPDR ETF, for example, features a variety of companies (recently 67 of them) involved in semiconductor equipment, internet software and services, IT consulting services, computers, and peripherals. The Vanguard Information Technology ETF casts a much wider net, encompassing more than 300 companies. It includes most of the "Magnificent Seven" stocks, such as Microsoft, Apple, and Nvidia. The Vanguard Growth ETF tracks the CRSP U.S. Large Cap Growth Index, which is focused on faster-growing large companies. It recently held close to 200 stocks, with these familiar top holdings: Microsoft, Apple, and Nvidia. (You'll notice that many technology-focused ETFs will have rather similar top holdings. So if you spread your dollars across a few, you won't be as diversified as you may think.)
• The iShares US Home Construction ETF is on the list due to its great track record. Whether it will continue will depend on your view of the home building market.
• Finally, the iShares Cybersecurity and Tech ETF and Fidelity Cloud Computing ETF are here because they focus on niches in the technology realm that have many ardent believers. They're still fairly new, so there isn't much of a track record to assess, but take a look if you're interested.

There are many other ETFs focused on all kinds of areas, such as artificial intelligence (AI), alternative energy, and more. Note, too, that some of the broad tech ETFs above will also contain a lot of exposure to top companies operating in AI, cloud computing, and more. That's the beauty of fairly broad funds -- you don't have to pinpoint big winners. You can just invest in a wide swath of potential winners.

Finally, a reassuring thought: If you're worried about having missed out on a bull market, note that the S&P 500 was recently down 5% from that high in July. So some desirable companies and funds are sporting lower, more attractive prices right now.